Concerned officials from Whitehall have held emergency meetings to discuss how to cope with the extra paperwork which is anticipated to treble their workload overnight.
Costly new form-filling will result in an estimated additional £70 million bill for the UK wine trade. When added to the wine duty hike enforced by the UK Chancellor earlier last month as well as the introduction of wine tariffs and rising inflation – a no deal Brexit will see UK wine consumers facing significant price rises.
Some 850 million litres of wine are imported into the UK each year where bottling wine in bulk and re-exporting it is huge business worth some £11 billion.
Wine UK’s fastest-growing ‘export’
Wine is currently the UK’s fastest-growing ‘export’ having risen in value by 177% in the last four years according to figures from the UK’s Department for Environment, Food and Rural Affairs and the Department of International Trade.
Any wine entering the EU from outside countries has to be accompanied by a VI-1 form. If Britain leaves the EU without a deal an estimated 500,000 new VI-1 forms – all accompanied by a lab test – will be required to keep European wine flowing in from Europe.
While countries bringing wine in from outside the EU to the UK already have to fill out a VI-1 form, the larger wine-producing nations eg Australia, the US and Chile have negotiated a simplified version of the VI-1 form to speed up the process.
But wine producers in New Zealand, Argentina and South Africa currently have to fill out the full VI-1 forms which include “an overcomplicated lab test” according to the UK’s WSTA.
Much of the imported wine is reshipped back to the EU and markets further afield, particularly to the Far East – countries like China, Singapore and Hong Kong.
Wine leaving the UK for reshipment back to the EU will also have to complete a VI-1 form – meaning an estimated additional 150,000 forms which will put a strain on wine exports, the UK’s sixth most valuable food and drink export.
Each form comes at a price, estimated to be around £20 per two-page document which has to be filled out by hand.
EMCS & the EU
Under the current system, as a member of the EU, the UK has access to the EU’s Excise Movement Control System which tracks alcohol coming into and out of the country documenting consignments electronically.
EMCS allows all alcohol categories to and from the EU to be moved on with no extra checks or costs. However a no deal Brexit will mean the UK loses EMCS which is likely to see ports descend into chaos, predicts the WSTA.
The new regime outside of the EU will mean European wine producers having to pay to fill out a form and on top of that they’ll have to pay for the extra laboratory tests for every consignment of wine sent to the UK no matter how big or small.
55% of wine consumed in the UK is imported from the EU and the burden, particularly on small wine producers that often stock independent wine merchants, is likely to be too great. In some cases wine supplies from smaller vineyards into the UK are expected to dry up.
Drowning in paperwork
But the extra form-filling won’t just leave the wine industry with a headache; UK wine inspectors will find themselves drowning in processing the paperwork, reports the WSTA.
Every hand-written VI-1 form will have to be scrutinised and stamped before wine from Europe is allowed into the UK.
It’s estimated that it would take 12 full-time wine inspectors a whole year to process the 500,000 new VI-1 forms expected to mount up after a no deal Brexit.
This does not take into account the other work carried out by Wine Standards which currently consists of a team of six regional inspectors.
TheUK’s Department for Environment, Food and Rural Affairs, which has overall responsibility for the movement of food and wine products, is working with the wine standards board and the WSTA on how to tackle the onslaught of added red tape.
“The additional form-filling and laboratory tests required for a no deal scenario will come as a real blow to exporters and importers alike,” said Miles Beale, Chief Executive of the Wine and Spirit Trade Association, “Wine inspectors will find themselves drowning in paperwork and – unless they can double their workforce – wine consignments are going to be held up by unnecessary additional red tape. The reality is that if we leave the EU without a deal wine businesses, big and small, will be facing a catalogue of extra costs which will ultimately be passed onto the British consumer.”
Wine duty worth £7.8 billion
According to the latest figures from a report by EY, wine duty contributes £7.8 billion to the public purse and the wine industry supports 189,000 jobs there.
The WSTA has been advising members for over a year that they should increase their stock by 20% as a starting point in case of a no deal Brexit.
This advice has been heeded by many UK wine businesses including Bibendum PLB (part of C&C) which says it has developed a “robust Brexit plan”. This has seen it ordering “significant” extra wine to have ready in stock. Majestic Wine also reported last year that it will hold another 1.5 million more bottles of European wine as part of emergency planning and Direct Wines is bringing in an additional two million bottles, a 40% increase on its usual stock.
WSTA seeks temporary tariff suspension
The WSTA has repeated it’s call on Government for a temporary suspension on all wine tariffs until the end of 2020 in the event of a no deal which would massively reduce the strain on the supply chain. WSTA also recently called on the Government to review urgently the proposed import rules, including documentation and to seek agreement from the EU to have continued access to EMCS.
The Association has further called for fairer duty rates as wine was singled out at the last Budget for a duty rise when spirits and beer were given a freeze.
The WSTA last year launched its #NoToNoDeal Campaign – www.dontbottleit.co.uk, which sets out exactly why passing a deal with the EU is so crucial to the prospects of the UK’s world-leading wine and spirit industry.
The Association has written to government ministers such as Michael Gove, Liam Fox and Philip Hammond outlining the wine industry’s cost and paperwork concerns over a no deal Brexit.